By Alec Hogg
During my spell with Absa in the mid-1990s, we often referred to the hidden benefit of change – how it breeds resilience among employees. The group created by a merger between four previously independent banks, was forced to tackle serious integration challenges. But these also made its staff highly adaptable, an unappreciated benefit in our rapidly transforming world.
What we experienced at Absa is reflective of South Africa post-1994. While data which Jacob Zuma prefers may not reflect it, even for casual observers of the SA workplace its social and economic transformation is obvious. And beneficial. Because living through change really does stimulate resilience and adaptability.
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Those benefits are now being reflected on a wider stage right now through the performance of SA’s exchange rate. Growing uncertainty in previously stable economies of competing currencies is affecting them. And, on a relative basis, supporting the Rand, where the nation’s change has become a constant.
The way currencies have reacted since the shock Brexit result illustrates the impact. Uncertainty about the UK’s economic future caused the Sterling to tank, losing a staggering 25% against the Rand since that fateful June 23 vote. Brexit also introduced new uncertainty for the continent, reflected in the Euro’s 15% fall against the Rand. That slide now looks likely to continue as EU secessionist voices grow louder.
The Dutch started Europe’s new election yesterday when voting on how their nation’s complicated governance structure will function in the next five years. In its 2012 vote, a coalition of the Liberal (41 seats) and Labour (38 seats) parties achieved a handy majority in a 150 seat Parliament. But these two have lost half those seats to smaller parties, particularly to Geert Wilders’ far right anti-Muslim campaign which set the entire election’s agenda.
Wilders’ Party for Freedom wants the country to leave the EU, demands greater sovereignty for the Netherlands, the closing of borders to immigrants and more protection against terrorists. Virtually all the other 27 Dutch parties contesting the election have been measured by voters primarily on how heavily they endorse these concepts – few dared reject them outright.
With a similar swing to populism is certain to be evident during the French Presidential elections next month, little immediate stability is in prospect for the Euro. Ditto around the German election in September – with the wild card of a possible Italian election forced by an anti-EU Five Star party complicating issues.
Euro optimists are hoping the realities of Brexit and Trump will soon resonate with voters, pushing them away from populism. Perhaps. But the bigger question for the currency is the impact of continued uncertainty. Which, absent an SA own goal, suggests a rosy period ahead for the Rand on a relative basis.
